PURPOSE: To insure directors and officers (and in some cases other employees) for defence costs and legal liability incurred
on account of claims and prosecutions against them in their role in the insured organisation. Also to insure them for representation
costs in investigations of them by regulators and other authorities.

Key cover features

Additional limit for loss which law or insolvency prevents the policyholder or a subsidiary from reimbursing its insured person

Additional limit for defence costs (up to 10% of D&O section main limit of liability)

Allocation of defence costs: Chubb ‘allocates’ to covered loss, and up to the D&O section main limit, 100% of the defence
costs on account of an allegation against both an insured person and that person’s organisation, if both use the same lawyers.
We do not 'allocate out' the organisation’s share of the defence costs

Advancement of defence costs as and when incurred

No avoidance or rescission for misrepresentation or non-disclosure (not even for fraudulent misrepresentation or non-disclosure);
cover limited only for those who knew true position or non disclosed facts

MisrepresentationA company was developing a device for preventing disease. It entered into an arrangement with a partner to sell and distribute
the product. The product turned out to be ineffectual. The partner had incurred substantial set-up costs and so sued the company
and its directors, alleging misrepresentation of the device’s properties.Defence costs and damages: £326,000

Disqualification for insolvent tradingTwo directors knew that their company could not realistically avoid collapsing, but carried on trading. In the last two weeks
before receivership the company incurred VAT liabilities of £50,000, which were never satisfied. For this insolvent trading,
the directors were at first disqualified from being company directors in the future. On appeal, the courts criticised the
directors, but decided they were not incompetent enough to deserve the ban, so lifted it.Defence costs: £100,000.

DefamationA company’s managing director was quoted in two newspaper articles as having concerns as to the propriety of the owner of
one of the company’s suppliers. The owner claimed for defamation. The claim was eventually dropped, but only after insurers
had funded the managing director’s defence costs.Defence costs: £32,000

Health and safetyA managing director and several technical managers faced criminal prosecutions for alleged breaches of health and safety legislation,
which resulted in the accidental deaths of two employees.Defence costs: £890,000

Shareholder claim: abuse of positionThree friends set up a construction company, they were the company directors and they owned shares. Some years later one of
the friends, in her position as shareholder, complained that the other two had breached their fiduciary duties as directors
in a number of ways. These included unnecessary client entertainment expenses by attending sports events abroad; allowing
friends excessive credit for building works; abuse of position and company assets to purchase other companies for themselves;
and misuse of the company for work on one’s home.Defence costs: £463,000

Dishonoured chequeWhilst his company was in receivership, a director signed a company cheque to pay a key supplier. The cheque was dishonoured
and the director was found personally liable for the amount of the cheque.